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Cyberlaw 2002: No clearer than 2001

With the state of Internet law remaining in flux in the last year, legal analyst Doug Isenberg predicts that the same condition will probably define a good part of next year as well.

Napster lost; Microsoft settled; terrorism threatens online privacy; and digital copyright laws are out of control. If that sounds like the Internet law year in review for 2001, just stick around--it's all bound to change--again--and more quickly than you can say "DMCA."

The state of Internet law remained in flux in 2001, and if any lesson has emerged, it's that the same thing will probably remain true for some time.

Here is a review of a few of the most important and interesting developments in Internet law in 2001--and some predictions for what's ahead in 2002.

Online privacy
The world's most important development in 2001--the terrorist attacks of September 11--had a significant impact on the Internet, as Congress raced to pass anti-terrorism legislation that changes how law enforcement conducts investigations in cyberspace. Civil libertarians cautiously criticized the USA PATRIOT Act (a lengthy acronym for "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism") as overreaching, invasive and unnecessary.

While the PATRIOT Act, for better and worse, seemingly encroaches on the privacy of Internet users, Congress failed to pass any general, non-terrorism-related Internet privacy laws, despite many predictions. Under the Clinton administration the Federal Trade Commission had urged the passage of online privacy laws. The FTC suddenly reversed course under the Bush administration in 2001. In October, FTC Chairman Timothy J. Muris said in a speech on online privacy: "We need more law enforcement, not more laws."

So what will happen to online privacy in 2002? There's no reason to doubt Muris' call for greater enforcement, so expect to see more privacy lawsuits brought by the FTC against online businesses that violate their own privacy policies or existing laws such as the Children's Online Privacy Protection Act.

The Microsoft antitrust case
At long last, the U.S. government's antitrust case against Microsoft appears to be nearing the finish line, with the parties--and many, but not all, of the states who joined the process--reaching a settlement agreement. As a result, the software giant avoids the possibility of a breakup, as had been previously ordered.

While the settlement is significant news, the impact on consumers, businesses, and the state of Internet law is unlikely to be great. The antitrust lawsuit was filed in 1998--forever ago in legendary Internet time. Back then, the lawsuit seemed to have some relevance to the future of the Internet, as Microsoft was struggling to achieve market share for its browser against Netscape's. Of course, we all know how that turned out. And the antitrust settlement agreement won't do anything to change Microsoft's stunning victory.

In 2002, Microsoft will continue to seek dominance over the Internet, but this time in an even more significant way than by introducing a single software product. Instead, Microsoft now is pushing its way into the Internet service provider industry with all its might--finally backing its MSN Internet service, expanding its Passport system, and vying for a piece of the critical cable modem infrastructure. If Microsoft succeeds on these fronts, the antitrust lawsuit and settlement suddenly could seem insignificant.

The Napster litigation
A year ago, Napster was losing legal battles and struggling to stay alive. At the end of 2001, this story hasn't changed much. The online music service continues to lose in court, continues to lose money, and continues to promise that it'll be back soon with a subscription model.

In the meantime, Napster's supposed 60 million users are going elsewhere--committing copyright infringement with the help of less user-friendly but more decentralized (and therefore more difficult to sue) services. And the recording industry is finally launching its own legal subscription services--proving yet again that the establishment and not the start-ups are among the most successful Internet players.

In 2002, Napster finally may emerge from the grave, but if so, it will be in name only--though, as trademark lawyers often counsel their Internet and non-Internet clients alike, a name can be among a company's most valuable assets. Apparently, the courts have made clear that although file-swapping technology may make enforcement difficult, the facilitation of widespread and unauthorized copying of someone else's intellectual property is clearly illegal.

The Digital Millennium Copyright Act
The unfairly maligned Digital Millennium Copyright Act (DMCA), a 3-year-old law, finally proved itself to be a significant sword for intellectual property owners in 2001:

Russian computer programmer Dmitry Sklyarov was criminally charged with violating the DMCA for his role at a company that publishes a program for decrypting files in Adobe's e-book format--although the U.S. Attorney's Office later agreed to drop the charges in exchange for Sklyarov's cooperation, including testifying against the company.

A federal court of appeals in New York affirmed a ruling under the DMCA that banned the plaintiffs from posting online or even linking to DeCSS, a software tool that enables copy-protected DVDs to be copied.

A federal district court judge in New Jersey dismissed a case brought on behalf of researchers who were threatened with a lawsuit under the DMCA by the Recording Industry Association of America and the Secure Digital Music Initiative Foundation if they published research about the vulnerabilities of digital watermark technology.

Critics say these judicial decisions threaten free speech on the Internet, while supporters contend that they simply provide legal protection against infringement where technology cannot. Though Sklyarov never deserved to be treated like a criminal and the fundamental nature of hyperlinking could be threatened by the DeCSS decision, the DMCA is not a poor law; it's just sometimes poorly wielded and often poorly understood.

In 2002, Congress could refine the DMCA, but don't count on it. Despite the urging of some lawmakers, academics and civil libertarians, Congress has more important issues on its agenda. Besides, the beneficiaries of the DMCA--intellectual property owners such as the entertainment industry--certainly will lobby against any dilution of this law, particularly as their works increasingly can be easily copied and disseminated online.

Other predictions
Some other significant Internet law developments from 2001 that will be interesting to see how they play out in 2002:

A federal judge in California ruled that a French judgment, prohibiting Yahoo from making Nazi memorabilia available on its online auctions, is unenforceable in the United States. The ruling was seen as a great victory for freedom of speech, but how will Net users react when a foreign government rules that the United States can't enforce its laws against child pornography or patent infringement in their countries?

The U.S. Supreme Court ruled in favor of freelancers whose works were electronically republished without their express permission. The decision was entirely predictable, but the effect was not: Suddenly electronic publishers are deleting content from their databases while simultaneously refusing to pay authors more for rights.

The U.S. Supreme Court heard only its second Internet-specific case, on the constitutionality of COPA, the never-enforced Child Online Protection Act that forbids publication on the Internet of material that is "harmful to minors." The Court's opinion--expected in the first half of 2002--will greatly shape the future of online content regulation.